Kingdee International Software Group Co Ltd reports 46.3% Net Income decline while 2.6% Revenue growth
16/03/2016 • About Kingdee International Software Group Co Ltd (
$268) • By InTwits
Kingdee International Software Group Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 31.9% in 2015, 37.2% in 2014, 33.2% in 2013, 7.8% in 2012, 19.5% in 2011
- Kingdee International Software Group Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.8%. At the same time it's a lot of higher than industry average of 5.9%.
- CAPEX is quite volatile: 44.0 in 2015, 69.8 in 2014, 139 in 2013, 315 in 2012, 203 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.1%
- It operates with high leverage: Net Debt/EBITDA is -1.2x while industry average is -2.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kingdee International Software Group Co Ltd ($268) key annual financial indicators
| mln. CNY | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,022 | 1,765 | 1,602 | 1,547 | 1,586 | 2.6% |
| Gross Profit | 1,418 | 1,147 | 1,206 | 1,276 | 1,292 | 1.3% |
| SG&A | 1,462 | 1,370 | 1,034 | 990 | 1,175 | 18.7% |
| EBITDA | 393 | 137 | 532 | 575 | 506 | -12.1% |
| Net Income | 145 | -140 | 126 | 197 | 106 | -46.3% |
Balance Sheet
|
|---|
| Cash | 650 | 913 | 999 | 1,521 | 2,071 | 36.2% |
| Short Term Debt | 20 | 227 | 420 | 546 | 244 | -55.4% |
| Long Term Debt | 598 | 1,364 | 1,155 | 1,291 | 1,213 | -6.1% |
Cash flow
|
|---|
| Capex | 203 | 315 | 139 | 70 | 44 | -37.0% |
Ratios
|
|---|
| Revenue growth | 40.8% | -12.7% | -9.3% | -3.5% | 2.6% | |
| EBITDA growth | -11.0% | -65.2% | 288.8% | 8.1% | -12.1% | |
| Gross Margin | 70.1% | 65.0% | 75.3% | 82.5% | 81.5% | -1.0% |
| EBITDA Margin | 19.5% | 7.8% | 33.2% | 37.2% | 31.9% | -5.3% |
| Net Income Margin | 7.2% | -7.9% | 7.9% | 12.7% | 6.7% | -6.1% |
| SG&A, % of revenue | 72.3% | 77.6% | 64.5% | 64.0% | 74.1% | 10.0% |
| CAPEX, % of revenue | 10.0% | 17.9% | 8.7% | 4.5% | 2.8% | -1.7% |
| ROIC | 8.9% | -3.6% | 7.0% | 8.0% | 5.1% | -2.8% |
| ROE | 9.2% | -8.8% | 7.6% | 10.5% | 4.1% | -6.5% |
| Net Debt/EBITDA | -0.1x | 5.0x | 1.1x | 0.5x | -1.2x | -1.8x |
Revenue and profitability
The company's Revenue increased on 2.6% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 10.0 pp from 15.2% to 5.2% in 2015.
Gross Margin decreased slightly on 1.0 pp from 82.5% to 81.5% in 2015. SG&A as a % of Revenue surged on 10.0 pp from 64.0% to 74.1% in 2015.
Net Income marign decreased on 6.1 pp from 12.7% to 6.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.8% in 2015. Kingdee International Software Group Co Ltd's CAPEX/Revenue dropped on 15.1 pp from 17.9% in 2012 to 2.8% in 2015. It's average CAPEX/Revenue for the last three years was 5.3%.
Return on investment
The company operates at low ROIC (5.15%) and ROE (4.06%). ROIC decreased on 2.8 pp from 8.0% to 5.1% in 2015. ROE decreased on 6.5 pp from 10.5% to 4.1% in 2015.
Leverage (Debt)
Debt level is -1.2x Net Debt / EBITDA and 2.9x Debt / EBITDA. Net Debt / EBITDA dropped on 1.8x from 0.5x to -1.2x in 2015. Debt dropped on 20.7% in 2015 while cash jumped on 36.2% in 2015.
Appendix 1: Peers in Software
Below you can find Kingdee International Software Group Co Ltd benchmarking vs. other companies in Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pizu Group Holdings Ltd ($8053) | | 40.3% | -42.9% | 1,742.9% | 157.9% |
| China City Railway Transportation Technology Holdings Co Ltd ($1522) | 194.6% | 164.0% | 33.6% | 100.5% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | -16.7% | 393.7% | -6.6% | 92.2% | |
| Epicurean and Co Ltd ($8213) | | 177.0% | 185.7% | 62.6% | 22.0% |
| China Bio Cassava Holdings Ltd ($8129) | -15.0% | -14.2% | 38.8% | 55.1% | |
| |
|---|
| Median (31 companies) | 18.5% | 13.1% | 13.2% | 21.2% | 10.7% |
|---|
| Kingdee International Software Group Co Ltd ($268) | | -12.7% | -9.3% | -3.5% | 2.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Bio Cassava Holdings Ltd ($8129) | 90.2% | 90.4% | 97.4% | 98.4% | |
| NetDragon Websoft Inc ($777) | 90.1% | 93.4% | 90.8% | 89.3% | |
| China Mobile Games and Cultural Investment Ltd ($8081) | 19.4% | 6.5% | 45.3% | 84.8% | |
| Kingsoft Corp Ltd ($3888) | 85.5% | 86.8% | 86.3% | 82.4% | |
| Aurum Pacific China Group Ltd ($8148) | 63.1% | | 81.4% | 72.9% | |
| |
|---|
| Median (30 companies) | 42.6% | 35.6% | 37.3% | 35.1% | 18.6% |
|---|
| Kingdee International Software Group Co Ltd ($268) | 70.1% | 65.0% | 75.3% | 82.5% | 81.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sinosoft Technology Group Ltd ($1297) | 55.5% | 62.6% | 54.9% | 57.2% | |
| International Entertainment Corp ($1009) | 235.1% | 50.8% | 64.0% | 54.9% | 62.0% |
| China Binary Sale Technology Ltd ($8255) | 41.3% | 35.1% | 35.4% | 44.4% | 50.5% |
| Microsoft Corp ($4338) | 42.8% | 33.5% | 39.2% | 38.0% | 25.8% |
| TravelSky Technology Ltd ($696) | 43.3% | 38.1% | 35.8% | 31.9% | |
| |
|---|
| Median (31 companies) | 8.9% | 7.7% | 10.8% | 6.0% | 9.1% |
|---|
| Kingdee International Software Group Co Ltd ($268) | 19.5% | 7.8% | 33.2% | 37.2% | 31.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| NetDragon Websoft Inc ($777) | 13.3% | 21.1% | 34.6% | 54.6% | |
| China Eco-Farming Ltd ($8166) | 0.3% | 0.6% | 0.7% | 18.1% | |
| TravelSky Technology Ltd ($696) | 5.8% | 8.9% | 21.7% | 18.1% | |
| Kingsoft Corp Ltd ($3888) | 6.8% | 4.3% | 3.8% | 14.3% | |
| Sing Lee Software Group Ltd ($8076) | 19.4% | 3.3% | 0.2% | 14.0% | |
| |
|---|
| Median (30 companies) | 2.0% | 1.4% | 2.5% | 3.1% | 0.5% |
|---|
| Kingdee International Software Group Co Ltd ($268) | 10.0% | 17.9% | 8.7% | 4.5% | 2.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| China Binary Sale Technology Ltd ($8255) | | 27.7% | 26.9% | 28.4% | 19.0% |
| Microsoft Corp ($4338) | 43.4% | 28.6% | 30.3% | 26.2% | 15.6% |
| Sinosoft Technology Group Ltd ($1297) | 31.6% | 34.0% | 21.9% | 20.2% | |
| Boyaa Interactive International Ltd ($434) | 100.4% | 75.3% | 21.3% | 20.0% | |
| ITE Holdings Ltd ($8092) | -19.6% | -15.0% | 10.6% | 16.8% | 19.8% |
| |
|---|
| Median (31 companies) | 1.6% | 3.0% | 3.5% | -2.0% | 2.2% |
|---|
| Kingdee International Software Group Co Ltd ($268) | 8.9% | -3.6% | 7.0% | 8.0% | 5.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pizu Group Holdings Ltd ($8053) | | | | 346.1x | -0.4x |
| Epicurean and Co Ltd ($8213) | 2.9x | 2.3x | 4.7x | 12.3x | 12.0x |
| Sing Lee Software Group Ltd ($8076) | | | | 6.2x | |
| China Technology Solar Power Holdings Ltd ($8111) | | | 7.4x | 3.3x | 0.2x |
| Chinasoft International Ltd ($354) | -1.3x | -0.7x | 0.7x | 1.5x | |
| |
|---|
| Median (19 companies) | -1.0x | -1.0x | -1.5x | -1.2x | -0.4x |
|---|
| Kingdee International Software Group Co Ltd ($268) | -0.1x | 5.0x | 1.1x | 0.5x | -1.2x |
